The Treasury is this week expected to deliver a £1bn-plus devolution boost to Andy Street, the West Midlands mayor.
Sky News understands that the chancellor, Jeremy Hunt, will outline plans for additional funding for the region in his budget on Wednesday.
Sources said the plans would include money generated from the disposal of government-owned land, the creation of new levelling-up zones and retention of business rates.
The West Midlands Combined Authority would also take on greater responsibility for affordable housing provision in the region, according to one source.
The package will be part of the “Trailblazer” devolution programme that Mr Street has made a centrepiece of his mayoralty.
A similar-sized package – albeit one comprising different elements – is also expected to be unveiled for Greater Manchester this week, where the mayor – former Labour minister Andy Burnham – has called for greater regional powers.
The West Midlands and Greater Manchester mayoral authorities are the first two to be designated as Trailblazers.
A Financial Times report in January said that Mr Hunt wanted to tackle “the ‘begging bowl’ relationship” between the Treasury and English regions.
It said plans being considered by the Treasury included funding settlements like those allocated to Whitehall departments.
The Treasury said it did not comment on budget speculation, while a spokesman for Mr Street declined to comment.